Steps to arrive at a problem statement
Let us get started in taking your business problem and writing out an AI problem statement.
STEP 1: Define the Business Problem (P)
STEP 2: Identify the Pain Point or Impact (I)
STEP 3: Find out who does it affect (C)
STEP 4: What is the starting point to solve (S)
when you are done you will be able to write out the Problem Statement as “P has impact I on C and can be solved by S.”
To get here, start with the business problem as stated by the business owner.
Ask questions to understand the business pain. Go from light level asks of safety or business sustainability to something more quantifiable.
For example, keeping a plant safe is qualitative. Ask questions to understand what makes the plant unsafe. Quantify the condition.
For example, if the business wants to grow strategically, ask questions to understand what are the different ways the business can grow.
Narrow it to one customer type about whom they can provide data.
Brainstorm different ways to solve the customer’s pain point. There is no one right answer here. You can solve the same problem using multiple solutions.
For example, if you want to increase revenues, you can sell more quantity to the same customer segment or you can increase the price of the same product and sell to the same customer. Or you can up-sell more products to the same customer.
Or you can sell same product to new set of customers. You can sell the same product to a smaller number of new set of customers with a higher price offering.
Or you can create a mix of old and new customers
Or you can create a mix of old and new price offering.
There are so many opportunities to solve the same problem. You need to drill-down to quantify each to arrive with clarity what is the desired business outcome.
Each of these solution options will give you multiple customer use cases. A use case is the experience explained from the customer point of view. Thinking about multiple use cases will help you drill-down the solutions to specifics of how you want to execute the solution.
For example, if you want to offer a new product offering for customers, you may chose to offer a coupon to customers to entice them to try the new product. This means that you need to know which customer segment will respond better to the coupons. Or you may want to find out what coupon amount might be acceptable to the customer segment based on what you know about their past purchase buying price.
Each will lead you to a different way of solving the problem.
Pick one. Be sure that it meets your business outcome to solve the business problem and it is actionable and can be done by the business people involved.
At this stage, you are ready with the problem statement. You will have to make sure that you have the data required to solve the problem.
Since the AI understands only data in the form of A -> B (Input —> Output), finally you will define the question in the form of the output. Rest of the data columns you have will become inputs (or factors).
Now, Product Managers, you have an additional role here.
Before you proceed, define your success metrics for the business when you succeed building out the AI. That is what you will achieve when the AI offers the output you want it to predict. Next, define the success of the model. Typically data scientists will define performance as the success of a model and will assume that a low number is a bad performing model. You will define the model success by the business outcome. But based on the model’s role in your business, you get to define what % performance is acceptable to your business’s success and ethical standard you set for your business.
For example, a robotic surgical arm should perform close to 100% in its output to decide movement of the robot whereas an AI model reducing customer churn by 10% can be considered good if it achieved that business outcome even with a low performing model of 20% AI confidence.
We can look at the data to ensure that you have all the right inputs in the next phase.
For now, you are ready to define the business problem and write it in the format below.
“Problem B has impact I on customer C and can be solved by Solution S.”
Good Luck!
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